Air New Zealand’s profit plummets, interim CEO appointed

Air New Zealand has posted a big drop in profit for the 2019 financial year, as well as providing an update on its hunt for a new boss.

The airline posted a net profit after tax of $254.9 million for the 12 months to 30 June 2019 – down a whopping 31 per cent on FY18.

Air New Zealand said the result was driven by operating revenue growth of 5.3 per cent to $5.5 billion, which was offset by a $180.3 million increase in the price of fuel, as well as a temporary increase in operating costs as the airline sought to improve network resiliency for its customers in the face of the global Rolls-Royce engine issues.

Earnings before taxation fell 31 per cent to $353.1 million for Air New Zealand in FY18.

Chairman Tony Carter said: “While we are disappointed that we did not meet the expectations we first set for ourselves at the start of the financial year, the fact is we are operating in a different demand environment than we were 12 months ago.

“To have achieved a solid result despite these headwinds speaks volumes about the extraordinary dedication and commitment of our people.

“When we first saw signs that demand was slowing, we took immediate steps to review our network, fleet and cost base, to position the airline for success in a lower growth environment. While we have made progress, this work is still ongoing.

“I am very confident in our strategy and our experienced, world-class executive team who are focused on driving our business back to earnings growth, while ensuring that we maintain the airline’s strong customer-centric culture.”

In light of CEO Christopher Luxon’s impending departure next month, Air New Zealand has announced that chief financial officer Jeff McDowall will take up the position of acting CEO from September 26 until a successful candidate, selected through a global search process, starts. Mr McDowall is not seeking permanent appointment to the role.

Stephan Deschamps will take up the position as acting chief financial officer of the airline.

Carter said the Air New Zealand board was highly satisfied with how the global search for a new CEO was progressing.

The chairman will step down from the role on 25 September and be replaced by director Dame Therese Walsh, who is leading the search process for a new CEO on behalf of the Air New Zealand board.

Walsh said the strength of the airline’s brand and its people has attracted strong interest from candidates within New Zealand and overseas.

She said that given the calibre of the candidates being considered in the selection process, it is possible that the new CEO of Air New Zealand will not start until the first quarter of 2020.

“We are fortunate to have a talented executive team who are united in their support of Jeff to lead them and the business as acting chief executive officer during this interim period,” she said.

“Jeff has held senior management roles across the airline for more than a decade and is well-known to investors, stakeholders and key partners, such as the travel trade and unions.”